Cheap Condos in Phuket – You Get What You Pay For
The Phuket property market has exploded in recent years, attracting seasoned investors looking to diversify their investments as well as perhaps somewhat inexperienced investors just starting up their real estate portfolio.
At first glance the cheap condos in Phuket might look like the best deal; you’ll get ”more property” for your money, right? That is not necessarily true though, and in this article we will outline exactly why you shouldn’t cheap out on your condo investment, in Thailand and Phuket in particular.
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Go For Quality
While it might be tempting to purchase a cheap condo because you don’t want to put too much money in the market, it’s important to also take into consideration what you’ll actually get as a higher price per square meter often means higher quality, better finishing and just a higher standard.
This is particularly important for investors who plan to use their property as a holiday home on a regular basis as the quality then directly will affect your living standards.
The price will also almost certainly reflect not only the location of the unit in the building (what’s the view etc.), but also the location of the project as a whole. Prime land plots in Phuket are not cheap, and particularly sea view and beachfront property is in high demand driving the prices up.
If your budget is limited you might want to consider a bank loan if the expected rental return outweighs the banks interest rate. You can find out what is required to be eligible for a bank loan in Thailand here.
Off-plan projects also often offer extensive payment terms which can be stretched over several years.
Embrace the Common Area Fee
“I really like the project, but the common area fee / maintenance fee is too high” is feedback we receive from our clients from time to time when recommending a project.
When you think about it, it’s a contradictory statement as the higher common area fee might be a reason why the project is so attractive in the first place!
A higher common fee means more money to be spent on staff, repairs and just general maintenance keeping the property in tip-top shape. Not only will that lead to a pleasant experience for residential use, but also higher achievable rental returns and a higher resale value.
Good Rental Management Company = Good Business
Similar to the point regarding a maintenance fee that is on the higher side, a relatively high rental management fee will almost certainly mean a more professionally managed rental management operation. If a big hotel-chain has been brought in to manage the property, they certainly won’t do it on the cheap..
On the positive side, they are likely to make you more money in the long run leveraging their experience and knowledge about the business. If you are interested in finding out who will manage a certain property, ask your trusted real estate agent who surely will be happy to help you out.
Higher Price = Higher Returns
The achievable rental returns can be described as a function of the price. You will often hear that a property is expected (or in some cases even guaranteed) to generate a certain percentage of rental return every year.
If your 3 million baht property at project x is expected to generate 10% rental return of 300,000 baht per year, how much would a 5 million baht property at the same project generate? You do the math and tell me which will put more money in your pocket. Hint: It’s not the cheap property in Phuket.
Use A Lawyer
We always recommend our clients to use a lawyer when purchasing property in Phuket. While it’s generally a clean and honest market, it’s good to have someone with knowledge of the law in your corner. Keep in mind that you not only need knowledge of the law, but might also need to battle the language barrier.
If you are purchasing from a large development, there will almost certainly be lawyers around that have been hired to review the sales and purchase agreement and various contracts regarding that project already and will have experience of the paperwork. You can read more about the procedures of using a lawyer in Thailand here.